The valuation of intellectual property assets may create exposure to risk from multiple sources. Various tribunals and agencies may value intellectual property differently, creating substantial risk for intellectual property owners. Valuing intellectual property may also create compliance issues based on requirements from regulatory bodies.
For example, the Sarbanes Oxley Act of 2002 creates specific duties of corporate officers that may create liabilities if breached. Although professional liability insurance has been used to protect officers from liability, this insurance does not signal the quality of any company asset or accuracy of any specific management decision. Further, by their very nature and structure, such policies cover a range of “wrongful acts” subject to myriad exclusions and exceptions.
Financial guarantees, which are predictions of future value, have been used to act as collateral for loan transactions involving intellectual property. But these are only operational at the time the collateral is repossessed if the intellectual property owner defaults on the loan. Further, insurance policies that utilize bonding instruments have been used to validate valuation assumptions, but they have been limited to valuing tangible assets.